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The Paper studies a straightforward adverse selection problem in which an informative but imperfect signal on the agent’s type becomes public ex post. The agent is protected by limited liability, which rules out unboundedly high penalties. Analysing the consequences of the additional...
Persistent link: https://www.econbiz.de/10005666621
A government agency delegates to a provider (hospital, medical gatekeeper, school, social worker) the decision to supply a service or treatment to individual recipients. The agency does not perfectly know the distribution of individual treatment costs in the population. The single-crossing...
Persistent link: https://www.econbiz.de/10010762662
Evidence on adverse selection in slave markets remains inconclusive. A necessary prerequisite is that buyers and sellers have different information. We study informational asymmetry on the slave markets through notarial acts on public slave auctions in Mauritius between 1825 and 1835, involving...
Persistent link: https://www.econbiz.de/10005518805
We analyze a game of two-sided private information characterized by extreme adverse selection, and study a special case in the laboratory. Each player has a privately known "strength" and can decide to fight or compromise. If either chooses to fight, there is a conflict; the stronger player...
Persistent link: https://www.econbiz.de/10005537375
Many adverse selection models of standard one-period debt contracts are based on the following seemingly innocuous assumptions. First, entrepreneurs have private information about the quality of their return distributions. Second, return distributions are ordered by the monotone likelihood-ratio...
Persistent link: https://www.econbiz.de/10005423696
This paper looks at social insurance of short term absence from work. The chief concern is with efficiency properties of full coverage. That arrangement is reviewed and criticized here in light of received theory. A main point is that positive loading of the premium implies less than full...
Persistent link: https://www.econbiz.de/10005435874
This paper addresses the class of generalized agency problems: situations in which adverse selection and moral hazard are jointly present. We present a decomposition of the principal's optimization problem under the first-order approach that sheds light on the interactions between the two types...
Persistent link: https://www.econbiz.de/10005370610
This paper studies a simple setting in which the contractual arrangements which determine the incentives for agents are not designed by a single central planner, but are themselves the outcome of a game among multiple noncooperatively acting principals. The notion of an Epsilon Contracting...
Persistent link: https://www.econbiz.de/10005370616
We examine the strategic role of information transmission in a repeated principal-agent relationship where the agent produces information that is useful to the principal. The agent values continuous employment for the principal because he makes a relationship-specific investment that can yield...
Persistent link: https://www.econbiz.de/10005370907
We develop a model that incorporates both spatial heterogeneity and adverse selection to examine the features of optimal prices paid by an agency purchasing a bundle of services on behalf of consumers with different underlying characteristics. Service bundles are two dimensional, and to be...
Persistent link: https://www.econbiz.de/10005396427